SYDNEY, 11 May 2021: The Federal Budget for 2021-22 has fallen short of building a platform for true tax reform which would facilitate lasting economic recovery and growth in the wake of COVID-19, despite some positive tax measures which continue to facilitate the economic stimulus that was started last year being announced.
The Tax Institute’s General Manager, Tax Policy and Advocacy, Scott Treatt, CTA, said that, “While the tax measures announced this evening were a step in the right direction, they were unfortunately not enough to fix a broken tax system. In a nutshell, it was not quite ambitious enough from a tax policy perspective.”
The Budget introduced many positive measures including an additional low and middle income tax offset, an extension of the temporary full expensing and loss carry back measure announced in last year’s budget and new powers for the Administrative Appeals Tribunal to pause or modify ATO debt recovery actions in small business disputes, but neglected other important areas of tax policy that Scott said could have a major impact on Australia’s economic future.
“The patent box is a real positive move in the right direction to supporting Australia’s growth, by bridging the gap between development and commercialisation. However, while some measures support industry and economic recovery I would have liked to see the Government commit to a roadmap to reform of the tax system as a whole.”
Last year, stimulus measures such as JobKeeper and the cash flow boost were instrumental in allowing Australia to emerge from COVID-19 in a relatively strong economical position. But their implementation also revealed cracks in the system.
“The COVID-19 stimulus measures demonstrated just how vital the Australian tax and transfer system is for small businesses and our economic standing on a global stage. It also shone a light on some major issues with that system,” Scott said.
“It’s important that our political leaders take opportunities like the Federal Budget to start the lengthy and complex job of improving our tax system. We can’t keep dancing around tax reform. We can’t afford to.”
“The Federal Budget 2021-22 was a missed opportunity to set an agenda through which we can create true tax reform, unfortunately.”
Scott Treatt is available to provide an expert perspective on: